Govts must be ready to spend more on economic stimulus: IMF

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PARIS, Dec 23 (Reuters): Governments should be ready to increase their spending on economic stimulus programmes if circumstances require it, the International Monetary Fund's chief economist Olivier Blanchard said in comments published Tuesday.
In an interview with French daily Le Monde, Blanchard called on Germany in particular to boost its spending in the next few months as some of its European partners such as France have called for.
"The coming months will be very bad. Halting this loss of confidence, providing stimulus and, if necessary, replacing private demand are essential if we want to prevent the recession from becoming a Great Depression," Blanchard told Le Monde.
Blanchard said the IMF was sticking to a target of two per cent of global gross domestic product for the fiscal stimulus required, but warned that more may be needed.
"If the circumstances require it, states must be ready to do more, three per cent or more if necessary," he said, adding: "We must think about it now because it is not easy to spend such large sums of money efficiently."
Germany has been criticised by some other European countries, particularly France, for not being prepared to spend more on an EU-wide stimulus programme to kickstart growth as the global financial crisis hits the real economy.
Berlin says it will review its stimulus programme in January to see if more spending is necessary.